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Leidos Surges on Strong Defense and Tech Growth
4 Nov
Summary
- Revenue grew 4% to $4.63 billion, with strong EPS growth.
- Free cash flow surpassed full-year targets, reaching $1.5 billion YTD.
- Defense segment backlog surged, indicating robust future demand.
Leidos Holdings Inc. announced a robust financial performance, with revenue climbing 4% to $4.63 billion and adjusted EBITDA margin improving to 13.9%. Non-GAAP diluted earnings per share saw a significant 19% year-over-year increase to $3.62. The company's operating cash flow reached $523 million for the quarter, contributing to a year-to-date total of $1.5 billion, exceeding its original full-year projection.
Net awards for the quarter amounted to $5.5 billion, resulting in a book-to-bill ratio of 1.2x. The Defense segment, in particular, showed strong momentum with a book-to-bill ratio of 1.9x for the quarter and 2.0x year-to-date. This surge in demand is supported by a total backlog of $49.6 billion, up 4% year-over-year.
Despite a contraction in the Health segment due to changes in the VBA business, Leidos demonstrated resilience. The company is strategically investing in high-growth areas such as Defense Tech, energy, and cyber. Over a dozen programs are transitioning to rate production, with a $14 billion pipeline of opportunities in Defense Tech over the next 12 months.
Looking ahead, Leidos anticipates 2027 will not be a bottom-line growth year due to the VBA transition and increased investments in Defense Tech production capacity. However, the company is optimistic about accelerated top-line growth in other portfolio areas and a strong bottom-line recovery beyond the near-term VBA transition.
